Fodder is a term for small, weak, inexpensive ships (usually Light Fighters) used to prevent larger ships from taking damage during attacks. It can also refer to inexpensive defenses, usually Rocket Launchers or Light Lasers, used to increase the chances that more advanced defenses (such as Gauss Cannons or Plasma Turrets) will not be destroyed during an attack, thus successfully repelling the attacker.
As targets in a battle are chosen randomly, having lots of weaker units will decrease the chance that bigger ships will be targeted, take damage and be destroyed.